Reverse Mortgage Alternatives
I recently came across a new company offering homeowners up to 50% of their home’s future value in cash, with no interest payments. The company is named Rex & Co. It appears to be an interesting concept and might be a way for mortgage brokers that aren’t FHA approved to cash in on the reverse mortgage market that we have been hearing for years is going to be huge. How does it work?
The REX Agreement is not a loan, but a real estate investment agreement in the form of a purchase option. It gives homeowners a portion of their home’s equity in cash today in exchange for the right of REX & Co. to share in a specified percentage of the future increase or decrease in the home’s value.
For the right to share in an agreed upon percentage of the future change in value of the home, REX & Co. pays the homeowner what is called an Option Exercise Price - equal to the current value of the home multiplied by the percentage of the future change in value granted to REX & Co. If the home increases in value, REX & Co. shares in the gain. If the home declines in value, REX & Co. shares in the loss. Simply stated, there is nothing like the REX Agreement in home finance.
Rex & Co offers a potential revenue stream for mortgage brokers. They offer a convenient online sign up form to sell their services. Traditionally reverse mortgages have been a hard sell and Rex & Co may offer a less scary alternative to reverse mortgages.
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